VW pleads guilty in emissions case; 6 execs indicted

Volkswagen is pleading guilty to three criminal charges and will pay $4.3 billion to the U.S. government for cheating on emissions tests and destroying evidence in an elaborate cover-up.(Photo: Gene J. Puskar / AP)

The U.S. government is indicting six present and former Volkswagen AG executives and charging the company with three criminal felony counts for what regulators called a “10-year conspiracy” to rig hundreds of thousands of diesel cars to cheat U.S. emission standards. Volkswagen is also being forced to pay $2.8 billion in criminal fines and $1.5 billion in civil penalties related to the fraud.

The U.S. Department of Justice said Wednesday that Heinz-Jakob Neusser, 56; Jens Hadler, 50; Richard Dorenkamp, 68; Bernd Gottweis, 69; Oliver Schmidt, 48; and Jürgen Peter, 59, all of Germany, have been indicted and charged with one count of conspiracy to defraud the United States by a federal grand jury in the Eastern District of Michigan. James Robert Liang, leader of diesel competence for VW from 2008 through June, pleaded guilty to a criminal charge in September for his role in the automaker’s diesel emissions scandal.

Volkswagen’s plea agreement is pending approval by U.S. District Judge Sean Cox, who has been assigned to the case in the Detroit court.

Under the agreement, Volkswagen is pleading guilty to charges of participating in a conspiracy to defraud the United States and violating the Clean Air Act. The company is being charged with obstruction of justice for destroying documents related to the emission scheme and with using false statements to import cars into the U.S. that failed to comply with federal emission limits.

U.S. officials said the criminal charges and large fines that are being levied against Volkswagen are fitting because knowledge of the emission cheating and the attempt to cover it up went to the highest levels of the German automaker.

“These individuals all held positions of significant responsibility at Volkswagen including overseeing the company’s engine development division and serving on the company’s management board,” U.S. Attorney General Loretta Lynch said during a news conference in Washington. “Over the course of a conspiracy that lasted nearly a decade, they seriously abused those positions. And today they are being charged with a range of crimes including conspiracy to defraud the United States, violations of the Clean Air Act and wire fraud.”

Volkswagen Chief Executive Matthias Müller said Wednesday that his company “deeply regrets the behavior that gave rise to the diesel crisis.

“Since all of this came to light, we have worked tirelessly to make things right for our affected customers and have already achieved some progress on this path,” he said in a statement. “The agreements that we have reached with the U.S. government reflect our determination to address misconduct that went against all of the values Volkswagen holds so dear. They are an important step forward for our company and all our employees.”

Five of the six former Volkswagen executives who have been indicted are still in Germany. The sixth, Oliver Schmidt, former general manager of the Engineering and Environmental Office for VW of America, was arrested in Miami on Monday and charged with one count of conspiracy to defraud the U.S. to commit wire fraud and violate the Clean Air Act.

Lynch said Wednesday that it is too early to predict whether German officials would cooperate with an extradition request from the U.S. for the remaining VW officials who are now under indictment.

“I will say that we have always worked very well with our German colleagues on various law enforcement matters,” she said. “It’s too early to predict right now how matters will be resolved there. We have had a number of cases in other matters where we have been able to reach resolution with individuals, and so I won’t speculate on that right now because it’s too early in that part.”

Volkswagen has been under fire in the United States since it was accused by the U.S. Environmental Protection Agency in September 2015 of selling diesels for years with software that activated required air pollution equipment only during emissions tests. They had been marketed as “clean diesels” for the company’s Volkswagen, Audi and Porsche brands between 2008 and 2015.

The automaker has admitted to programming its diesel cars to trick emissions testers into believing the engines released far less pollution into the air than they actually do, in violation of the federal Clean Air Act. Regulators have said that in normal driving they emitted up to 40 times more smog-causing nitrogen oxide than the legal limit.

Volkswagen has stopped selling diesel cars in the U.S. since it admitted to the scheme.

The $4.3 billion fine comes in addition to a $14.7 billion settlement the company reached earlier this year with the EPA that calls for Volkswagen to spend $10 billion to either buy back or repair about 475,000 2-liter diesel vehicles that were sold between 2009 and 2015 and were built with devices to trick emissions testers; the company must contribute $4.7 billion to federal efforts to reduce pollution.

Volkswagen’s criminal and civil fines dwarf recent criminal penalties paid by General Motors Co. and Toyota Motor Corp. for safety violations. GM was forced to pay $900 million fine over its handling of vehicles with a dangerous ignition switch defect that was ultimately linked to 124 deaths and hundreds of injuries. And it is far more than the $1.2 billion that Toyota Motor Corp. was penalized for issuing misleading statements about cars that experienced unintended acceleration in 2014.

The federal government has authority to levy heavier fines for environmental violations under the Clean Air Act than the National Highway Traffic Safety Administration does for safety infractions. Congress has capped the transportation department’s ability to fine automakers is capped at $105 million. The limit was increased from $35 million in a 2015 transportation funding bill.

Federal officials said Wednesday that the penalties that are being imposed now on Volkswagen are fitting given the German company’s transgressions against U.S. laws.

“This is a case that illustrates a company that at very high levels knew of this problem and deliberately chose to continue with the fraudulent behavior,” Lynch said.